Keeping Ahead of the Wireless Pricing Curve

Keeping Ahead of the Wireless Pricing CurveStaying at the forefront of wireless pricing trends requires revisiting contracts and pricing frequently, and keeping contracts as short and flexible as possible.

Staying at the forefront of wireless pricing trends requires revisiting contracts and pricing frequently, and keeping contracts as short and flexible as possible.

The evolution of wireless services is proceeding as fast, if not faster, than any other area of IT services, and it is matched (if not exceeded) by the head-snapping speed at which the prices available to Enterprise buyers are changing.

New kinds of rate plans, with the focus moving from voice to data, coupled with new complications such as "BYOD", make keeping on top of the latest trends in enterprise wireless pricing as complex as ever. Here is a look at pricing trends in the coming year.

Shared Data Plans will become the norm in 2013
While Sprint and T-Mobile continue to offer enterprises unlimited data plans for smartphones, AT&T and Verizon Wireless have continued their crusade against unlimited data allowances. In 2012 Verizon Wireless effectively declared war on unlimited data plans, and during negotiations is aggressively seeking to remove smartphone plans with unlimited data from enterprise customer contracts.

Giving up unlimited data plans can feel like a backwards step, but savvy customers have realized that as of 2013, average business user smartphone data volumes are relatively moderate. For the many large enterprises for which TC2 has performed detailed wireless usage analyses, almost all have an average usage for BlackBerry users of less than 100MB per month, and even for more advanced iOS and Android devices, the average usage is only a few hundred MB per month.

Moving from unlimited data plans to plans that provide a few gigabytes of data will not (at least in the short term) suddenly lead to large bills due to many users exceeding their data usage allowance. Knowing this, smart customers are trading unlimited plans for other pricing concessions, including lower-priced smartphone plans. In the longer term, as data usage continues to rise (see discussion of 4G/LTE usage below), usage levels will need to be more closely monitored against usage allowances.

Another option that customers are examining as part of giving up unlimited data plans is the availability of "shared" (or "pooled") smartphone plans, where data allowances are shared across all users. The key benefit of such plans is that power users who exceed their individual data usage allowance have access to other users' un-used allowances instead of incurring data overage charges.

Given the fact that enterprise users' smartphone data usage is not (at least currently) particularly high, why are wireless carriers so anxious to eliminate unlimited plans? Perhaps the withdrawal of unlimited plans looks good on Wall Street. In the alternative, the carriers expect average data usage to increase dramatically as users migrate to smartphones with devices that can operate on 4G/LTE.

Network studies already show that users with the latest 4G/LTE-capable smartphones exhibit substantially higher average data usage than users with older 3G devices. Such trends tend to be exacerbated by the fact that the users who seek out the latest devices and who want 4G/LTE speeds are typically already big data users. TC2's data for 4G/LTE air cards (including mobile WiFi or MiFi devices, and USB modems) also demonstrates significantly higher average usage than by 3G users. A parallel pattern of users increasingly using MiFi and smartphone tethering capabilities, instead of separate air card and MiFi devices, is also driving smartphone data usage upwards.

Shared data plans for air cards have already made significant inroads into enterprise wireless contracts, and shared data plans for tablets are also becoming more common. In competitive procurements, the pricing for such shared data plans is very close, if not equal, to traditional un-shared data plans.

* Avoiding data overage charges--By putting all users on shared plans, the overage charges incurred by certain users who from time to time exceed their individual data allowance is avoided, as long as the overall shared data pool is big enough.

* The potential to use plans with lower allowances--Users have typically used 5GB individual air card plans, but average usage is often substantially lower than 5GB. With shared data plans, users can all be given a data plan sized at the average usage level, rather than at a higher level required to minimize the risk of overage charges for each individual user. This provides far greater potential for using less expensive plans that provide less than 5GB shared data.

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